Two towns, each with three members, are decidingwhether to put on a fireworks display to celebrate theNew Year. Fireworks cost $360. ln each town, somepeople enjoy firewurks more than others.a. ln the town of Baypor~ each of the residents val•ues the public good as follows,F,ank $50Joe $100Call ie $300Would fireworks pass a cost-benefit analysis?Explain.b. The mayor or Bayport proposes to decide bymajority rule and, if the fireworks referendumpasses, to split the cost equally among allresidents. W'ho would vole in favor, and whowould vote against? Would the vote yield thesame answer as the cost-benefit anal)•Sis?c. In the town of River Heights, each of the residentsvalues the public good as follows:Nancy $20Bess $140Ned $160Would fireworks pass a cost-benefit analysis?Explain.d. The mayor of River Heights also proposes todecide by majority rule and, if the fireworksreferendum passes, lo split the cost equally amongall residents. Who would vote in favor, and whowould vote against? Would the vote yield thesame answer as the cost-benefit anal)•sis?c. What do you think these examples say about theoptimal provision of public goods?
Two towns, each with three members, are deciding
whether to put on a fireworks display to celebrate the
New Year. Fireworks cost $360. ln each town, some
people enjoy firewurks more than others.
a. ln the town of Baypor~ each of the residents val•
ues the public good as follows,
F,ank $50
Joe $100
Call ie $300
Would fireworks pass a cost-benefit analysis?
Explain.
b. The mayor or Bayport proposes to decide by
majority rule and, if the fireworks referendum
passes, to split the cost equally among all
residents. W'ho would vole in favor, and who
would vote against? Would the vote yield the
same answer as the cost-benefit anal)•Sis?
c. In the town of River Heights, each of the residents
values the public good as follows:
Nancy $20
Bess $140
Ned $160
Would fireworks pass a cost-benefit analysis?
Explain.
d. The mayor of River Heights also proposes to
decide by majority rule and, if the fireworks
referendum passes, lo split the cost equally among
all residents. Who would vote in favor, and who
would vote against? Would the vote yield the
same answer as the cost-benefit anal)•sis?
c. What do you think these examples say about the
optimal provision of public goods?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
